Uruguay stands out in Latin America with its low levels of poverty, inequality and corruption. Its economy grew in 2022 and is expected to grow by nearly three percent in 2023.
The government is focused on securing a free trade agreement with China this year that will be a major boost for Uruguay's business sector. Another positive is that the European Union (EU) recently removed Uruguay from its gray list of countries under investigation for tax evasion.
As its tourism industry recovers, and its agriculture and meat exports remain strong, Uruguay is an attractive destination for foreign investment in 2023.
However, establishing a footprint in this market can be complicated, so using one employer of record in Uruguay is one of the best ways to ensure your business complies with local regulations.
Let's take a closer look at Uruguay's current business environment and the benefits of investing in this unique South American country.
Why is Uruguay good for business?
Despite the ongoing unfavorable global economic conditions, Uruguay continues to be a leading market in Latin America.
It was recently ranked number 5 out of 137 countries on BTI Transformation Index, ahead of any other Latin American country. The index analyzes and evaluates how countries steer social change towards democracy and a market economy.
It is one of the founders of Mercosur trade bloc, which aims to create business and investment prospects by integrating national economies into the global market. This gives Uruguay strategic access to other markets in South America, including Brazil, Argentina, Paraguay, Bolivia and Venezuela.
It is relatively quick and easy to start a company in Uruguay with the right support. There is no minimum amount of capital needed, except for finance and insurance companies.
5 reasons why Uruguay's business is worth investing in
- Stable political landscape
- Growing economy
- The talent reserve
- Booming tech industry
Here are five reasons why Uruguay is an exciting place to do business in 2023.
1 – Stable political landscape
Uruguay has one of the most stable democracies in the region. It was ranked 19th out of 194 countries in the 2021 Political Stability Index and leads the way in Latin America.
It also leads the way as the least corrupt country in the region, Uruguay was 21st on Transparency International's latest corruption list. The next LATAM country was Chile which ranked 27th while Costa Rica was the only other country to make the top 50.
2 – Location, location, location
Uruguay's strategic geographic location offers many advantages for trade and commerce. With a coastline that makes it possible to receive shipping, the country has one of the most important ports in South America, Montevideo.
It also shares borders with two influential countries in South America, Brazil and Argentina. Uruguay's exceptional infrastructure supports its regional trade and logistics operations across all modes of transport, including air, land and sea.
Its favorable location, combined with its robust infrastructure, presents an excellent opportunity for companies looking to expand their operations in the region.
3 – Growing economy
Uruguay's economy is expected to grow by about three percent this year, significantly exceeding the Latin American average of just over one percent for 2023.
Its economy was ranked 27th out of 176 countries (2nd in LATAM) i 2023 Economic Freedom Index. Uruguay's high ranking is due to its openness to foreign investment, regulatory efficiency and free trade agreements.
Uruguay's positive business conditions are aided by its large agricultural industry and recovery in the tourism sector.
4 – Technical talent pool
Uruguay has a population of nearly 3.5 million and an adult literacy rate of over 98 percent. This ranks it first in South America and 33rd in the world.
In recent years, Uruguay has become known for its excellent software developers. It is now over 500 technology companies in the country which has led to incredible growth in a highly skilled IT workforce.
This technical talent pool offers a low-cost alternative for North American companies and the time zone transition is perfect for nearshoring opportunities.
5 – Booming tech industry
In November 2022, Uruguayan President Luis Lacalle Pou announced a new program to develop the country as a hub for innovation and entrepreneurship.
Between the software and ICT services, Uruguay's exports have reached about one billion dollars. It is the number one software exporter per capita in South America.
The government is working with partners like Microsoft to develop artificial intelligence, 5G, the Internet of Things and more. Uruguay's growing technology industry offers exciting opportunities for foreign investment.
What are Uruguay's top business industries?
- Agriculture – The agricultural industry accounts for 12 percent of the country's total GDP and 70 percent of exports. Its main products are rice, soybeans, corn, wheat, citrus fruits and apples.
The government has strengthened the agricultural sector with favorable policies such as no restrictions or restrictions on the export of agro-industrial goods.
- Fintech – Uruguay rose 46 positions to 17th in the Global Fintech Index 2021. This rapid growth led to Uruguay earning its first fintech unicorn in dLocal (Valued at nearly $9 billion.)
Uruguay's digital payment transactions for businesses are expected to reach a value of US$2,241 million by 2023. Growth in fintech has led some to call Uruguay … “the Switzerland of South America”.
- tourism – Before the pandemic, tourism was one of Uruguay's smartest industries. And while the numbers have yet to recover to pre-pandemic levels, it is expected to grow in 2023.
In 2020, Uruguay generated almost US$1 billion from tourism and ranked 46th in the world and first in South America for tourist numbers (per capita.)
Biz Latin Hub can help you kick-start your business in Uruguay
If you are thinking of establishing and conducting business in Uruguay, Biz Latin Hub can be your reliable partner.
Our Montevideo-based team of bilingual business support specialists can tailor a service package to meet your specific needs. Our services range from accounting and taxation, business formationlegal support, employment and PEO.
To discover more about how we can help your Uruguay and Latin America business, Contact our expert team today.
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